Cairn Energy Strikes Oil in Greenland

Massive deposits could one day make Inuits the Saudis of the north.

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They've found oil in Greenland. The success of a massive deep-water drilling rig operated by Cairn Energy, a Scottish company, could mean that the world's newest oil-and-gas rush is underway, this time in one of the globe's most remote, rugged and pristine locations. For Americans used to hearing about huge fossil fuel deposits in Venezuela, Nigeria, Saudi Arabia, Russia and other locations that are politically unstable or intermittently antagonistic toward the West, this could come as welcome news. Greenland is a lightly inhabited arctic wilderness administered for now by the unthreatening Scandinavian country of Denmark. The territory is counting on oil and mineral development to fund a gradual move toward independence, and the discovery is being cheered in Nuuk, Greenland's capital.

The arctic may contain 90 billion barrels of oil and 1.7 trillion cubic feet of natural gas, according to the United States Geological Survey, and a third of those vast quantities likely lie within Greenland's territory, where Cairn has been drilling exploratory wells this summer. These were the first wells sunk in the region since the 1970s, but more are sure to follow. Upward of a dozen major international energy companies have leases to explore for fossil fuels in Greenland's waters.

Cairn announced the discovery of oil in its Alpha-1S1 well at a depth of about 14,300 feet on September 21, 2010, in volcanic rock; gas has also been found, in silty layers. The company had hit gas deposits in a different Greenland well in August. All of Cairn's drilling operations this year have been in Baffin Bay, which is roughly as large as the North Sea. It remains to be seen whether this summer's wells become the basis for commercial operations.

All this drilling took place under the shadow cast by this year's Deep Horizon oil spill in the Gulf of Mexico. The operation faced particular opposition by Canadians, whose coasts could be affected by an oil spill in Baffin Bay. Greenpeace activists brought some of Cairn's operations to a halt this summer by boarding a rig, but only for a few days, and they found little support among Greenland's citizens. This is one of the few places in the world where people have positive feelings about climate change. (The environmental organization reportedly is unpopular in Greenland because of previous tussles over seal-hunting.)

Oil and gas exploration is accelerating elsewhere in the Arctic, as well, particularly in Russia. While the Deep Horizon spill prompted the delay of drilling operations in Alaska's Beaufort and Chukchi Seas by Shell, that project is likely to resume for next summer.